The main goal of consumer bankruptcy is full or partial debt relief. The advantage is getting rid of debts, creditors and returning to normal life. But the price you have to pay for it is the loss of property. On consumer bankruptcy very different people decide to do so, both the poor and the very wealthy, who have fallen into a debt spiral and are unable to get out of it.
How does the process work? Instead of many individual proceedings, there is one. The court, seeking to satisfy creditors' claims, determines the composition and value of the bankruptcy estate (our assets and income) and distributes this among the creditors. If necessary, it decides on the sale of property and decides which debts can be written off. If we can show that we will pay our debts without having to get rid of our house or flat, the court can stop the sale of our assets and ask the creditors whether they agree to the arrangement.
The process of liquidation of assets is carried out by a court-appointed trustee. His or her role ends when a decision is made to terminate the insolvency proceedings and to establish a plan for repayment of creditors. From then on, it is up to the court and the creditors to supervise the implementation of this plan.
The court decides how much we will have to repay based on our earnings and the number of dependants. It also decides how much of our obligations will be written off after the repayment plan has been implemented. Voluntary partial repayment of debts lasts for a maximum of three years. However, the court may skip this stage altogether in the most difficult situations where you cannot afford the repayments. Debt relief is also granted without repayment of creditors. The point of consumer bankruptcy is, therefore, first and foremost to de-indebt the person who has got into trouble. The satisfaction of creditors is in the background.
In order for insolvency to occur, we must indicate all assets to the trustee together with the documentation. We cannot conceal anything. Otherwise, the proceedings will be discontinued, making it impossible for us to benefit from debt relief for the next ten years. In the bankruptcy petition, we state: the composition of the assets, the cash held, the debts owed to banks and other parties, a list of all creditors, including those we are disputing. In addition, it is a good idea to include evidence of the circumstances that led to the insolvency (e.g. loss of employment). We can also submit witnesses. Finally, we must justify the application well.
The court dismissed our application, if in the past we were subject to or discontinued bankruptcy proceedings. We also have no chance of bankruptcy if in previous proceedings we did not execute the repayment plan, did not file reports, concealed sources of income, provided false or incomplete data in the application. The same awaits us if, while running a business, we did not file bankruptcy petition, even though we had such an obligation.
- At the end of December 2014, bankruptcy became a consumer right. Two debt relief modes were introduced. In the first, debt relief follows the end of the proceedings and is provided for the most vulnerable. The second mode relieves the debtor of his or her obligations if he or she pays part of the debt for a certain period of time (not more than 36 months). An argument in favour of using the consumer bankruptcy provisions is the low costs. The application fee is PLN 30 and the costs of the trustee (from one quarter of the average salary after it is doubled) are lower than the costs of a bailiff. The inconvenience that the consumer has to reckon with is the necessity to liquidate the assets.
22 March 2018:
" No debts, but also no assets
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